Sunday, May 27, 2012

9 Deadliest Start-up Sins

Whether your venture is a new pizza parlor or the hottest new software product, beware: These nine flawed assumptions are toxic.

1. Assuming you know what the customer wants
First and deadliest of all is a founder’s unwavering belief that he or she understands who the customers will be, what they need, and how to sell it to them. Any dispassionate observer would recognize that on Day One, a start-up has no customers, and unless the founder is a true domain expert, he or she can only guess about the customer, problem, and business model.

On Day One, a start-up is a faith-based initiative built on guesses. To succeed, founders need to turn these guesses into facts as soon as possible by getting out of the building, asking customers if the hypotheses are correct, and quickly changing those that are wrong.

2. The “I know what features to build” flaw
The second flawed assumption is implicitly driven by the first. Founders, presuming they know their customers, assume they know all the features customers need.

These founders specify, design, and build a fully featured product using classic product development methods without ever leaving their building. Yet without direct and continuous customer contact, it’s unknown whether the features will hold any appeal to customers.

3. Focusing on the launch date
Traditionally, engineering, sales, and marketing have all focused on the immovable launch date. Marketing tries to pick an “event” (trade show, conference, blog, etc.) where they can “launch” the product. Executives look at that date and the calendar, working backward to ignite fireworks on the day the product is launched. Neither management nor investors tolerate “wrong turns” that result in delays.

The product launch and first customer ship dates are merely the dates when a product development team thinks the product’s first release is “finished.” It doesn’t mean the company understands its customers or how to market or sell to them, yet in almost every start-up, ready or not, departmental clocks are set irrevocably to “first customer ship.” Even worse, a start-up’s investors are managing their financial expectations by this date as well.

4. Emphasizing execution instead of testing, learning, and iteration
Established companies execute business models where customers, problems, and necessary product features are all knowns; start-ups, on the other hand, need to operate in a “search” mode as they test and prove every one of their initial hypotheses.

They learn from the results of each test, refine the hypothesis, and test again—all in search of a repeatable, scalable, and profitable business model. In practice, start-ups begin with a set of initial guesses, most of which will end up being wrong. Therefore, focusing on execution and delivering a product or service based on those initial, untested hypotheses is a going-out-of-business strategy.

5. Writing a business plan that doesn’t allow for trial and error 
 Traditional business plans and product development models have one great advantage: They provide boards and founders an unambiguous path with clearly defined milestones the board presumes will be achieved. Financial progress is tracked using metrics like income statement, balance sheet, and cash flow.

The problem is, none of these metrics are very useful because they don’t track progress against your start-up’s only goal: to find a repeatable and scalable business model.

6. Confusing traditional job titles with a startup’s needs 
Most startups simply borrow job titles from established companies. But remember, these are jobs in an organization that’s executing a known business model. The term “Sales” at an existing company refers to a team that repeatedly sells a known product to a well-understood group of customers with standard presentations, prices, terms, and conditions. Start-ups by definition have few, if any, of these. In fact, they’re out searching for them!

The demands of customer discovery require people who are comfortable with change, chaos, and learning from failure and are at ease working in risky, unstable situations without a roadmap.

7. Executing on a sales and marketing plan 
Hiring VPs and execs with the right titles but the wrong skills leads to further trouble as high-powered sales and marketing people arrive on the payroll to execute the “plan.” Executives and board members accustomed to measurable signs of progress will focus on these execution activities because this is what they know how to do (and what they believe they were hired to do). Of course, in established companies with known customers and markets, this focus makes sense.

And even in some start-ups in “existing markets,” where customers and markets are known, it might work. But in a majority of startups, measuring progress against a product launch or revenue plan is simply false progress, since it transpires in a vacuum absent real customer feedback and rife with assumptions that might be wrong.

8. Prematurely scaling your company based on a presumption of success
The business plan, its revenue forecast, and the product introduction model assume that every step a start-up takes proceeds flawlessly and smoothly to the next.

The model leaves little room for error, learning, iteration, or customer feedback. Even the most experienced executives are pressured to hire and staff per the plan regardless of progress. This leads to the next startup

9. Management by crisis, which leads to a death spiral 
The consequences of most start-up mistakes begin to show by the time of first customer ship, when sales aren’t happening according to “the plan.” Shortly thereafter, the sales VP is probably terminated as part of the “solution.”

A new sales VP is hired and quickly concludes that the company just didn’t understand its customers or how to sell them. Since the new sales VP was hired to “fix” sales, the marketing department must now respond to a sales manager who believes that whatever was created earlier in the company was wrong. (After all, it got the old VP fired, right?)

Reference:
http://steveblank.com/2012/05/14/9-deadliest-start-up-sins/

Friday, May 18, 2012

The Best Marketing Advice “Gurus” Never Tell You

An irresistible marketing message doesn’t just happen overnight – forget what the “gurus” have preached to you in the past. Invest time and energy into creating a marketing message that catches your clients’ and prospects’ attention, and makes them come back for more.

TWO secret ingredients to your marketing strategy:
• Provide proof that your product actually works.
• Even if your product doesn’t work, your customers always come out on top.

Knowing Your Clients:

Step 1: Who Is Your Ideal Client:
This is a very important question, because you can’t sell to people you don’t know anything about.

Step 2: Understanding the Decision-Making Process:
There are four roles in a purchasing decision. All four roles can be performed by the same person or by different people.
#1 Researcher - Who researches the different options available?
#2 Decision Maker - Who makes the final decision?
#3 Influencer - Who influences the decision?
#4 User - Who uses the product?

Step 3: Finding Hot Button:
They are different people with different motivations. Include benefits for your target customer(s) in your marketing message, that hits their motives.

Step 4: Reaching Your Audience 
Based on the research you did, you should have an idea now about how can you reach these targeted audiences. Here are few questions to consider:
  • What magazines do they read?
  • What websites do they visit?
  • What radio shows do they listen to on a regular basis?
  • How do they make their decisions? By recommendation? If so, who do they get recommendations from? How can you reach those people?
Step 5: Do It!
At this point, you know who your ideal client is; how he or she makes their decisions; who else is involved in the decision making process; what motivates these people to take action and how to reach them. Your next step? DO IT!

How to Be Remarkable and Make a Lasting Impression
This is my favorite part about marketing: you need to be weird. A great product, at an even better price, just won’t do the trick. When I say weird, I don’t mean ‘crazy’ weird. I mean creative and different – when it’s time to step outside your marketing comfort zones.

Why You Should Position Yourself as a Specialist
  • Higher Perceived Value: When you’re the “tax consultant who does taxes for small business owners in the health industry,” your services have a much higher perceived value than those from “that person who does taxes for the entire planet.”
  • Charge More Money
  • Less Competition (or No Competition at All)
  • Easier to Find Your Target Market: When you find a niche market, finding your customers who want and need your products/services is a piece of cake.
  • Push Your Customers’ Hot Buttons: When you find a niche market, you can tailor your marketing message to say exactly what your market wants to hear.
  • Inexpensive Marketing Channels
Remember:
  • If you’re in business just for the money, your customers will notice it.
  • Measure everything you do, find out what works and what doesn’t - DO more of what works!
  • It is perfectly acceptable to think BIG sometimes when it comes to your target markets.
  • The larger the market, the more people to sell products to.
  • You can have low-ticket items to engage people into your sales funnel, but make sure you have high-ticket products to offer down the road.
  • Offer a great solution to a painful problem AND the money will follow.
  • Clients are your best research tool! Ask and you shall receive.
Reference:
Zeke Camusio, "The Internet Marketing Bible", 2011.

To download a free copy of the book click here: http://www.theoutsourcingcompany.com/blog/internet-marketing/get-my-book